If the average consumer doesn’t receive a increase in income corresponding to the rate of inflation and does not have sufficient disposable income to absorb the increased cost of living, he or she must either dip into savings or take on consumer debt.  While the U.S. had a savings rate of -3.1% (that is negative 3.1% meaning that the average consumer was de-capitalizing) last year, the rate of de-capitalization is probably much higher at this time.  So the average consumer is getting screwed.

But what about the Fed?  It buys that $1.6 trillion in currency from the U.S. Treasury at about $0.0003 per dollar (a thousand dollar bill costs essentially the same as a twenty dollar bill).  The Fed then buys $1.6 trillion in T-Bills and U.S. Government Bonds from the U.S. Treasury.

Lets see now.  The Fed spent a whopping $500 million or so to buy $1.6 trillion in currency.  Until that currency is in circulation it is only worth the $500 million the Fed paid for it.  But the second the Fed buys the T-Bills and Bonds, that currency is suddenly worth $1.6 trillion.  From an accounting viewpoint, the Fed will then have a revenue item on their income statement of $1.6 trillion and an expense item of $500 million. On their balance sheet they would have an asset item of $1.6 trillion.  With no offsetting liability item, owners equity just increased by $1.6 trillion.  The Rothschilds just got wealthier and we, you and I, got poorer.

What about the $500 million expense item on the Feds income statement?  The 4% interest on that $1.6 trillion in debt that our government assumed on our behalf is $64 billion per year or about $22 million per hour, every hour of every day, every day of every year.  So, one day of interest paid by us through the taxes we pay covered the $500 million cost to the Fed for the purchase of the currency.

But we still must continue to pay the Fed $22 million per hour, every hour of every day, every day of every year until the debt is repaid which is not in the foreseeable future.  So you and I are now indentured by our government to continue to make the Rothschilds richer presumably forever.

Will the government increase our taxes to pay that debt service?  They already have.  Dont you remember voting for the increase?  Probably not as we did not get a chance to vote on it.  While the Alternative Minimum Tax brackets were not so indexed, normal income tax brackets are supposed to be indexed by the rate of inflation so that inflation does not push us into higher tax brackets.   If inflation were 3% and you were able to achieve an increase in income of a corresponding 3%, you would not pay a higher percentage rate of tax as the brackets would have been indexed up by the inflation rate.  If you get an increase of more than the 3% inflation rate, then you might pay a higher rate of tax on some portion of the increase.

The Bureau of Labor Statistics seems to have borrowed a page out of the Enron corporate operating manual as they are reporting that inflation is currently running at only 3% or so and yet the cost of food has been inflating at 26% this year, energy at 15+%, healthcare at 13%, etc.  As noted above, Ron Paul, during his questioning of Bernanke, indicated that MZM seemed to substantiate that we are currently experiencing an inflation rate of 20%.  If we are experiencing an inflation rate of 20% or so, but the IRS is only indexing the tax rates by the 3% reported by BLS, you will pay a higher tax rate on any increase in income you achieve in excess of 3% and you must achieve more than 20% in increased income just to stay even.  So we are or will pay higher taxes.

If you are wondering whether the Fed has other expenses that would consume their windfall profits, they don’t.  The member banks claim they are lending the expertise of their bankers as members of the board of governors as a service to the U.S. government and, to keep the costs of operation of the Fed as low as possible, negotiated that the U.S. government own and maintain all facilities of the Federal Reserve System, and pay the salaries of all of the employees and all operating costs of the Federal Reserve System.  While the Fed does incur some cost in replacing worn out or damaged currency, the cost is minimal.

What level of investment did the seven commercial banks originally make (i.e. how much did they pay for their shares in the stock of the Federal Reserve)?  While a price per share was established and checks drawn on the seven commercial banks were submitted, there is no evidence that actual movement of money ever occurred, but the stock was transferred to the seven commercial banks anyway.

If the Fed spends less than 1% of assets on operations but is receiving 4% per year in debt service revenues, where is the other 3+% going?  The Fed pays an annual dividend of 3% per year to the stockholders.  That is how the Rothschilds actually receive the monies that you and I will be paying them, forever, unless we do something about it.

The question is, do you think we need to do something about it or do you feel that the Federal Reserve System is providing a valuable service to you at a reasonable cost.  If you think the latter is the case, I would welcome the opportunity to meet with you to discuss a similar arrangement under which you could make my mortgage payment for me.